Reg E '09 SS fin_mtd

Supporting Statement for Information Collection
Provisions of Regulation E
(Electronic Fund Transfer Act)
12 CFR 205
(OMB Control Number: 3084-0085)
1.

Necessity for Collecting and Retaining the Information

The Electronic Fund Transfer Act (“EFTA”), 15 U.S.C. 1693 et seq., requires accurate
disclosure of the costs, terms and rights relating to electronic fund transfer (“EFT”) services to
consumers. Entities offering EFT services must provide consumers with full and accurate
information regarding consumers' rights and responsibilities in connection with EFT services.
These disclosures are intended to protect the rights of consumers using EFT services, such as
automated teller machine (“ATM”) transfers, telephone bill-payment services, point-of-sale
transfers at retail establishments, electronic check conversion, payroll cards, and preauthorized
transfers from or to a consumer's account. The EFTA also establishes error resolution
procedures and limits consumer liability for unauthorized transfers in connection with EFT
services.
The Federal Reserve Board (“FRB”) promulgated Regulation E to implement the EFTA,
as required by the statute. The Federal Trade Commission (“FTC” or “Commission”) enforces
the EFTA as to all entities providing EFT services except those that are subject to the regulatory
authority of another federal agency (such as federally chartered or insured depository
institutions). The EFTA also contains a private right of action with a one-year statute of
limitations for aggrieved consumers.
Recordkeeping
Section 205.13(c) of Regulation E requires entities subject to the EFTA to retain for two
years evidence of compliance with the regulation. Regulation E also provides that any entity
subject to the EFTA that is notified by the FTC (or other administrative agency) that it is being
investigated or is the subject of an enforcement proceeding, or that has been notified of a private
or criminal action being filed, shall retain evidence of compliance until final disposition of the
matter, or such earlier time as allowed by a court or agency order. The recordkeeping
requirement insures that records that might contain evidence of violations of the EFTA remain
available to the FTC and other agencies, as well as to private litigants.
Disclosure
The vast majority of Regulation E's disclosure requirements are statutorily mandated by
the EFTA. See, e.g., consumer liability for unauthorized use, 12 CFR 205.6, 15 U.S.C. 1693g;
initial disclosures, 12 CFR 205.7, 15 U.S.C. 1693c(a); change in terms, 12 CFR 205.8, 15 U.S.C.
1693c(b); receipts at electronic terminals, 12 CFR 205.9(a), 15 U.S.C. 1693d(a); periodic
statements, 12 CFR 205.9(b), 15 U.S.C. 1693c; preauthorized transfers, 12 CFR 205.10, 15
U.S.C. 1693e; and error resolution, 12 CFR 205.11, 15 U.S.C. 1693f.

The FRB has issued model forms and clauses that can be used to comply with the written
disclosure requirements of the EFTA and Regulation E. See Appendix A to Regulation E.
Correct use of these model forms and clauses protects entities from liability for the respective
requirements under the EFTA and Regulation E. Id.
2.

Use of the Information

The FTC, other agencies, and private litigants use the records to ascertain whether
accurate and complete disclosures of EFT services and other required actions (for example, error
resolution and limitation of consumer liability for unauthorized transfers) have been provided.
This information provides the primary evidence of law violations in EFTA enforcement actions
brought by the FTC. Without the Regulation E recordkeeping requirement, the FTC's ability to
enforce the EFTA would be significantly impaired.
Consumers rely on the disclosures required by the EFTA and Regulation E to facilitate
informed EFT decisionmaking. Without this information, consumers would be severely
hindered in their ability to assess the true costs and terms of the transactions offered. Also,
without the special error resolution and limitation of consumer liability provisions, consumers
would be unable to detect and correct errors in their EFT transactions and fraudulent transfers.
These disclosures and provisions are necessary for the FTC and private litigants to enforce the
EFTA and Regulation E.
3.

Consideration of the Use of Improved Information Technology

The FRB has issued final rules to establish uniform standards for using electronic
communication to deliver disclosures required under Regulation E, within the context of the
Electronic Signatures in Global and National Commerce Act (“ESIGN”), 15 U.S.C. 7001 et seq.
72 FR 63,452 (Nov. 9, 2007). These rules enable businesses to utilize electronic disclosures and
compliance, consistent with the requirements of ESIGN, which became effective on Oct. 1,
2000. Use of such electronic communications is also consistent with the Government Paperwork
Elimination Act (“GPEA”), Title XVII of Pub. L. 105-277, codified at 44 U.S.C. 3504, note.
ESIGN and GPEA serve to reduce businesses’ compliance burden related to federal
requirements, including Regulation E, by enabling businesses to utilize more efficient electronic
media for disclosures and compliance.
Regulation E also permits entities to retain records on microfilm, microfiche, magnetic
tape or other methods capable of accurately retaining and reproducing information. Business
entities need only retain evidence demonstrating that their procedures reasonably ensure the
consumer's receipt of required disclosures and documentation; the entity need not retain records
of the actual disclosures and documentation given to each consumer. Section 205.13(b)-1 of the
FRB Official Staff Commentary on Regulation E.
In addition, due to the nature of electronic fund transfers, most entities that utilize such
transfers and are covered by the EFTA use computer support and various electronic means to
facilitate generation of the mandated disclosures, thereby limiting burden.
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4.

Efforts to Identify Duplication/Availability of Similar Information

The recordkeeping requirement of Regulation E preserves the information an affected
entity uses in making disclosures and other required actions regarding EFT services. The entity
is the only source of this information. No other federal law mandates its retention. State laws do
not duplicate these requirements, although some states may have other rules applicable to EFT
services.
Similarly, covered entities are the only source of the information contained in the
disclosures required by the EFTA and Regulation E. No other federal law mandates these
disclosures. State laws do not duplicate these requirements, although some states may have
other rules applicable to EFT services.
5.

Efforts to Minimize Burdens on Small Businesses

The Regulation E recordkeeping and disclosure requirements are imposed on financial
institutions and entities offering EFT services. The recordkeeping requirement is mandated by
Regulation E. The disclosure requirements are mandated by the EFTA and/or Regulation E. As
previously noted, the FTC’s role in this area is limited to enforcement; the EFTA vested
rulemaking authority in the FRB.
Most EFT entities today utilize some degree of computerization in their businesses,
which further assists in facilitating compliance with these requirements. Moreover, as discussed
above, entities need not retain every disclosure form provided to consumers if they retain
evidence demonstrating procedures that reasonably ensure the consumer's receipt of required
disclosures and records. Further, financial institutions no longer must make a receipt available at
the time a consumer initiates an EFT of $15 or less at an electronic terminal. See 72 FR 36,589
(July 5, 2007). EFTA also exempts entities that have $100 million or less in assets from the
requirements for preauthorized transfers. Additionally, as noted above, Regulation E provides
model forms and clauses that may be used in compliance with its requirements; correct use of
these forms and clauses insulates a financial entity from liability for the respective requirements.
6.

Consequences of Conducting Collection Less Frequently

The current record retention period of two years supports the one-year statute of
limitations for private actions, and the FTC's (and other administrative agencies') need for
sufficient time to bring enforcement actions regarding EFT transactions. If the retention period
were shortened, consumers who sue under the EFTA, and the administrative agencies that
enforce the EFTA, might find that the records needed to prove EFTA violations no longer exist
As noted, the current disclosure requirements are needed to foster informed EFT
decisionmaking and to identify errors and unauthorized transfers. Without these requirements,
consumers would not have access to this critical information, their right to sue under the EFTA
would be undermined, and the FTC and other administrative agencies charged with enforcing the
EFTA could not fulfill their mandates.
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7.

Circumstances Requiring Collection Inconsistent with Guidelines

Regulation E's recordkeeping and disclosure requirements are consistent with the
guidelines contained in 5 CFR 1320.5(d)(2).
8.

Consultation Outside the Agency

Before Regulation E was adopted and prior to each amendment, the FRB published the
regulation for public comment in the Federal Register, giving the public the opportunity to
comment on the recordkeeping and disclosure requirements associated with the rule.
More recently, the FTC sought public comment in connection with its latest PRA
clearance request for these regulations, in accordance with 5 CFR 1320.8(d). See 73 FR 70,347
(Nov. 20, 2008). No comments were received. Consistent with 5 CFR 1320.12(c), the FTC is
again seeking public comment contemporaneously with this submission.
9.

Payments or Gifts to Respondents
Not applicable.

10. & 11.

Assurances of Confidentiality/Matters of a Sensitive Nature.

The required recordkeeping and disclosures also contain private financial information
about consumers who use EFT services that is protected by the Right to Financial Privacy Act,
12 U.S.C. 3401 et seq. Such records may also constitute confidential customer lists. Any of
these records provided to the FTC would be covered by the protections of Sections 6(f) and 21 of
the FTC Act, 15 U.S.C. 46(f) and 57b-2, by Section 4.10 of the Commission's Rules of Practice,
16 CFR 4.10, and by the Freedom of Information Act, 5 U.S.C. 552(b), as applicable.
12.

Estimated Hours Burden: 3,731,343 hours
Recordkeeping

Staff estimates that Regulation E’s recordkeeping requirements affect 600,000 firms
offering EFT services to consumers and subject to the Commission’s jurisdiction, at an average
annual burden of one hour per firm, for a total of 600,000 hours.

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Disclosure
Regulation E applies to financial institutions (including certain retailers and various
payees engaged in electronic commerce), service providers, various federal and state agencies
offering EFTs, and others. Below is staff’s best estimate of burden applicable to this very broad
spectrum of covered entities.
Regulation E: Disclosures – Burden Hours

--------------- Setup/Monitoring --------------Average
Total Setup/
Burden per
Monitoring
Respondents Respondent
Burden
(hours)
(hours)

Disclosures1

Initial terms
Change in terms
Periodic statements
Error resolution
Transaction receipts2
Preauthorized transfers
Service provider notices
Govt. benefit notices
ATM3
Electronic check conversion4
Payroll cards5

100,000
25,000
100,000
100,000
100,000
500,000
100,000
10,000
500
100,000
100

.5
.5
.5
.5
.5
.5
.25
.5
.25
.5
.5

50,000
12,500
50,000
50,000
50,000
250,000
25,000
5,000
125
50,000
50

---------- Transaction-related--------Average
Total
Number of Burden per Transaction
Transactions Transaction
Burden
(minutes)
(hours)
1,000,000
33,000,000
1,200,000,000
1,000,000
5,000,000,000
1,000,000
1,000,000
100,000,000
250,000
3,500,000
2,500

Total

.02
.02
.02
5
.02
.25
.25
.25
.25
.02
3

333
11,000
400,000
83,333
1,666,667
4,167
4,167
416,667
1,041
1,167
125

Total
Burden
(hours)
50,333
23,500
450,000
133,333
1,716,667
254,167
29,167
421,667
1,166
51,167
175
3,131,342

1

This reflects an increase in entities offering EFT services to consumers.
Regulation E now exempts EFTs of $15 or less from receipt requirements, which could decrease the burden of providing transaction receipts.
However, use of the exemption could involve reprogramming costs. Due to the relatively recent change, the burden associated with transaction
receipts has not been changed.
3
Regulation E now permits ATM operators that do not charge fees for services in all circumstances to disclose on signs that a fee “may” (rather
than “will”) be charged. However, making this change would require replacing existing signage, which could increase disclosure burden. Due to
the relatively recent change and its voluntary nature, the burden associated with ATM notice has not been revised.
4
Regulation E now includes requirements for electronic check conversion.
5
Regulation E now includes requirements for payroll cards.
2

______________________________________________________________________________
Associated labor cost: $107,825,124
Staff calculated labor costs by applying appropriate hourly cost figures to the burden hours
described above. The hourly rates used below ($41 for managerial time, $30 for skilled
technical time, and $16 for clerical time) are averages.
Recordkeeping
For the 600,000 recordkeeping hours, staff estimates that 10 percent of the burden hours require
skilled technical time and 90 percent require clerical time. As shown below, the total
recordkeeping cost is $10,440,000.

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Disclosure
For each notice or information item listed, staff estimates that 10 percent of the burden hours
require managerial time and 90 percent require skilled technical time. As shown below, the total
disclosure cost is $97,385,124.
Regulation E: Recordkeeping and Disclosures – Cost

Required Task

------Managerial-----Time
Cost
(hours)
($41/hr.)

Recordkeeping
Disclosures:
Initial terms
Change in terms
Periodic statements
Error resolution
Transaction receipts
Preauthorized transfers
Service provider notices
Govt. benefit notices
ATM notices
Electronic check conversion
Payroll cards

0

$0

5,033
2,350
45,000
13,333
171,667
25,417
2,917
42,167
116
5,117
50

$206,353
$96,350
$1,845,000
$546,653
$7,038,347
$1,042,097
$119,597
$1,728,874
$4,756
$209,797
$2,050

-----Skilled Technical----Time
Cost
(hours)
($30/hr.)
60,000

Total
Cost
($)

$1,800,000

540,000

$8,640,000

$10,440,000

45,300 $1,359,000
21,150
$634,500
405,000 $12,150,000
120,000 $3,600,000
1,545,000 $46,350,000
228,750 $6,826,500
26,250
$787,500
379,500 $11,385,000
1,050
$31,5000
46,050 $1,381,500
125
$3,750

0
0
0
0
0
0
0
0
0
0
0

$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0

$1,565,353
$730,850
$13,995,000
$4,146,653
$53,388,347
$7,904,597
$907,097
$13,113,874
$36,256
$1,591,297
$5,800

Total Disclosures

$97,385,124

Total Recordkeeping and Disclosures

13.

--------Clerical-------Time
Cost
(hours)
($16/hr.)

$107,825,124

Estimated Capital and Other Non-Labor Costs

The applicable requirements impose minimal start-up costs, as financial entities generally
have or obtain necessary equipment for other business purposes. For the same reason, staff
believes that the cost of printing and copying needed to comply with Regulation E is minimal.
Staff anticipates that the requirements noted above necessitate ongoing, regular training so that
financial entities stay current and have a clear understanding of federal mandates. This training,
however, would be a small portion of and subsumed within the ordinary training that employees
receive apart from that associated with collecting information to comply with Regulation E.
14.

Estimated Cost to the Federal Government

The FRB promulgated the recordkeeping requirement of Regulation E, so there is no cost
to the FTC for that purpose. Enforcement of the recordkeeping requirement of Regulation E is
incidental to overall enforcement of the EFTA. In the course of compliance investigations, staff
routinely requests records of EFT disclosures and other required actions. If the records
requested are not available, it indicates that records are not being retained as required. Staff
estimates that the current fiscal year cost to the FTC Bureau of Consumer Protection of
implementing and administering this requirement will approximate $9,824, which is a
representative years’ cost of enforcing Regulation E’s requirement during the three-year
clearance period sought. This estimate is based on the assumption that one-sixteenth of one
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attorney work year will be expended. Clerical and other support services are included in this
estimate.
Regarding the enforcement of the disclosure requirements for Regulation E, staff
estimates that the cost to the FTC Bureau of Consumer Protection will approximate $157,184.
This estimate is based on the assumption that one attorney work year will be expended to
enforce various aspects of the disclosure requirements. Clerical and other support services are
also included in this estimate.
15.

Program Changes or Adjustments

Staff has adjusted upward the FTC’s previous annual burden estimate by 151,343 hours
(from 3,580,000 to 3,731,343). This reflects an increase in entities offering EFT services to
consumers, and new requirements for electronic check conversion and payroll cards.
16.

Publishing Results of the Collection of Information
Not applicable.

17.

Display of Expiration Date for OMB Approval
Not applicable.

18.

Exceptions to the Certification for PRA Submissions
Not applicable.

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